About High-Speed Rail Boondoggle

High-speed rail seemed like a good idea when it was approved by voters back in 2008, just as the financial crisis hit. So whatís changed since then? Everything.

Costs Have Increased from $33 Billion to at least $68 Billion

When voters approved Proposition 1A in November, 2008, authorizing $9.95 billion in bonds for High-Speed Rail, the CHSRA estimated the entire project would cost $33 billion. Federal and private funding were to make up the difference. In December, 2009, the CHRSA revised the cost for the first phase of the project upward to $43 billion. Then, in November, 2011, the CHSRA unveiled a revised business plan that estimated the cost at between $98.5 billion and $117 billion - at least three times the original projection - and pushed out the construction schedule by 13 years, so that the project would be completed in 2033, rather than 2020. The Authority and its supporters praised the revised plan as "realistic" and "conservative."

However, in April 2012, the plan was revised yet again at the request of Gov. Brown. By cutting the LA-Anaheim segment, and using existing commuter rail lines between San Francisco and San Jose, as well as in southern California, the Authority lowered the estimated cost to $68 billion and said service would begin on some segments by 2029. In both the November 2011 and April 2012 versions of the business plan, the Authority assumes that the federal government and private investors will step forward to pay the multiple billions of dollars in construction costs and claims the system will operate at a profit.

At a time when the state and federal governments are deeply in debt and cutting education, social service and other funding, can taxpayers afford a massive "bait and switch" infrastructure project that is virtually certain to cost more than current estimates?

A History of Mismanagement

The Authority has a history of mismanagement and making misleading statements. Below are descriptions of studies by organizations and the media that have documented issues that, if not substantively addressed, will increase the negative impacts of High-Speed Rail on communities and taxpayers.

Peer Review Group

In January 2012, the Peer Review Group commissioned under Prop 1A to analyze HSR for lawmakers recommended that the Legislature refuse to authorize the state bonds that would pay for a major part of the Central Valley segment. The lack of adequate funding, a definitive business model, appropriate management resources and other problems represent "an immense financial risk on the part of the state of California," wrote Will Kempton, who is chairman of the group, as well as the head of the Orange County Transportation Authority and a former director of Caltrans.

State Auditor

Also in January, State Auditor Elaine Howell said the Authorityís November 2011 revised business plan relied on uncertain funding sources and that projectís "overall financial situation has become increasingly risky." She also said the Authority inadequately manages its many contractors. As one example, Howell said it violated a state rule prohibiting agencies from splitting contracts to avoid competitive bidding requirements, dividing $3.1 million in information technology services into 13 different contracts with one vendor over 15 months.

Legislative Analystís Office

In November 2011, the non-partisan Legislative Analystís Office published an analysis of the Authorityís November 2011 business plan that stated funding sources were "highly speculative." It said "Congress has approved no funding for high-speed rail projects for 2012. As a result, it is highly uncertain if funding to complete the high-speed rail system will ever materialize." In addition, the analysis said that the 120-mile segment the Authority wants to begin building in 2012 is not a "usable segment" and therefore does not meet the legal requirements of Prop1A.

Misleading Estimates on Jobs

The Authority has misled the public and elected officials about the number of jobs that would be created by the project. After an investigation by the San Jose Mercury News was published in December 2011, that Authority was forced to concede the number of jobs was not more than a million, as previously claimed, but in the tens of thousands. It acknowledged its definition of jobs has been "imprecise and potentially confusing."

Flawed ridership projections

Ridership is the key to profitability, and projections used prior to the revised business plan were widely criticized by watchdog and non-partisan groups. For example, a UC Berkeley Institute of Transportation Studies report says the data used by the CHSRA was so "unreliable" that it is impossible to predict whether the project will be successful or lead to "severe revenue shortfalls."

The revised business plan uses a number of scenarios, but is still being widely criticized by experts. To read an article on revised ridership figures, please click here:

The watchdog group Californians Advocating Responsible Rail Design found the business plan assumed ridership demand would increase due to gasoline costing $40 a gallon. To read the analysis, click here:

Court Faulted Legislature On Prop1A Ballot Language

Do you remember that High-Speed Rail sounded like a good idea when you voted for Prop1A in 2008? Many of us thought so too. Part of the reason is that the Legislature wrote the ballot language in an unfairly favorable light. In January 2011, a state appellate court ruled in a unanimous three-judge decision that the Attorney General should write ballot language, which is standard procedure for signature-based initiatives.The Legislature dubbed the 2008 measure the "Safe, Reliable High-Speed Passenger Train Bond Act." The Attorney General called a previous version simply "High-Speed Rail Bonds." Presiding Judge Arthur Scotland wrote that if the Legislature wanted to write its own ballot language, it would need voter approval to do so. To read an article about the decision, click here.